Promoting Port Logistics Development in the Region

World Economic Crisis Effects Put in Trouble Shipping-Port Sector

May 17, 2017

Excerpt from an interesting article written by Karla López for the latest edition of the Informar magazine of the Ecuador Maritime Chamber, Camae.

Ten years ago, large shipping companies invested in ships that multiplied up to tenfold the capacity, waiting for the market to grow in that same size. Everything was a vision, expectations were short. This story has a beginning but doesn’t have an ending yet. In the particular case of Ecuador, between 35% and 40% dropped cargo import, according to the Ecuadorian Association of Cargo Agencies and International Logistics.

The low growth of world trade, the decrease in the freight rates due to the war between operators and to the increase in tonnage (of ships), as well as low oil prices, have forced the shipping-port sector to restructure.

One of the life-saving measures that the shipping companies implemented was forming alliances, mergers or acquisitions of other companies, in order to reduce costs, expand or reduce competitiveness. The output of the seventh shipping market Faced with the bleak panorama many port projects are reviewed and others have been suspendedworldwide, the South Korean Hanjin Shipping – considered the largest bankruptcy in history-, shook the market. Virus of bankruptcy barely reaches to Hyundai Merchant Marine, who managed to avoid it after reaching an agreement with creditors.

The three big shipping alliances operate 90% of container traffic… According to Blue Water Reporting (2016), over the past years alliances of shipping carriers took over operations on major routes, the Transpacific and the routes between Asia and Europe, reducing the space in these operations to the independent shipping companies.

The slowdown the influential economies in this business, like China, arises in the middle of an expansive process sector, which invests in equipment and port infrastructure. Faced with the bleak panorama many port projects are reviewed and others have been suspended. Charge attracts the ports and shipping companies, not vice versa…

A “modest” expansion of 1.3% will achieve the economy of Latin America this year, due to an increase in external demand, rising raw materials prices and an improvement in the weak economic activity in Brazil and Argentina, according to the Fitch Ratings agency.

In an interview with Portfolio of Colombia, President of the Inter-American Development Bank said that “it is clear that the good times are back, but more than one considers that this boom can last a little and that there are many crosswinds that must provide attention. More than one recalls that ten years ago everything seemed very well and a few months later the bubble burst”.

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